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BEIJING — An American business executive being held hostage by employees at his medical supply
plant in Beijing spent a fifth day yesterday in a surreal standoff that has highlighted the dearth
of legal protections in China for foreign investors and workers.

Yesterday afternoon, the executive, Chip Starnes, 42, a founder and president of Specialty
Medical Supplies, was kept out of sight, with local government officials insisting that he was
merely busy with his lawyers in negotiations.

“He is completely free within the factory; it’s just that he has stuff to do,” said Chu Lixiang,
an official with the government-run labor union in Huairou, a district of Beijing.

The dispute, which has drawn a throng of police officers, Chinese reporters and U.S. diplomats
to the factory in Huairou, began when the company, which is based in Coral Springs, Fla., and
manufactures medical goods such as lancets and insulin syringes, closed its injection-molding
division and gave roughly 30 employees what Starnes described in a telephone interview last night
as a generous severance package. But rumors soon spread that Starnes was planning to close the
entire plant and flee without paying the rest of the work force, which happens often in China.

Although he explained that the remaining workers were not being laid off, the remaining 100
employees barricaded the exits Friday and stopped him from leaving until he agreed to give them
compensation identical to that given to the laid-off employees, a sum he contends would bankrupt
the company.

Since then he has been trapped within the factory grounds, occasionally appearing at the barred
window of his office, looking haggard and in the same clothes he has worn since Friday. Over the
weekend, local officials coerced him into signing contracts that met some of the workers’ demands,
even as employees kept him awake with bright lights and loud noises.

In the interview, Starnes bemoaned his fate, saying local officials were pressing him to provide
lavish compensation to workers who were not scheduled to be laid off. “The union just wants to do
anything that will calm the people,” he said. “They are asking me to commit business suicide.”

Workers paint a starkly different picture of a company that has not paid its employees in weeks
as news spread that Specialty Medical was moving some operations to India.